A group in Nicaragua established a transport business. A competing transportation company was sponsored by the U.S. and owned in part by Nicaraguans. There was physical violence between the two companies. A mob threatened an American Diplomat and hit him with a bottle. As per the orders of the President of the United States, the Secretary of the Navy sent Lieutenant D, a captain of a US warship, to collect compensation and obtain an apology to the Diplomat. The locals ignored the request. D then burned the city down. Durand (P) was an American citizen who owned property that was destroyed. P sued D. D claimed he was following the lawful orders of his superiors.

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